Alternatives to Employer-Based Health Care

March 20, 2002

America's job-based system of health-care coverage is under serious strain. The costs of employer-paid premiums are escalating dramatically. Workers are losing their coverage along with their jobs. Health-care services become more expensive year by year.

Consequently, alternative systems are being suggested and debated.

On one side are conservatives who want to decouple health coverage from jobs -- perhaps giving workers some kind of portable personal health account to buy insurance, or health services, on the open market.

Liberals are pumping for a "single payer" system of government funding for most of the nation's health care.

President Bush's 2003 budget offers expanded medical savings accounts, or MSAs, and tax-favored flexible spending accounts -- along with tax credits to help fund insurance for the unemployed and workers not covered by health insurance.

"Defined Contribution" health plans -- in which employers give workers money to purchase their own coverage -- have become a hot topic of debate.

The Democrats don't like the idea of people being "thrown out there to fend for themselves with a tax credit," as an aide to Senate Majority Leader Tom Daschle puts it.

But to Republicans, this "empowers" the individual, and having consumers exercise responsibility for their own health care could go a long way toward controlling rampant health-care inflation.

Opponents fret that a wide array of choices would only confuse people. But Americans faced a similar wealth of choices after 401(k) pension plans were introduced. And, with few exceptions, say observers, they soon learned to make responsible choices and wise decisions.